SOUTHERN ENVIRONMENTAL LAW CENTER

t.he L.V. Sutton Steam Electric Plant coal-fired electricity generating plant ("Sutton") in New

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SOUTHERN ENVIRONMENTAL LAW CENTERTelephone 919-967-1450 601 WEST ROSEMARY STREET, SUITE 220

CHAPEL HILL, NC 27516-2356Facsimile 919-929-9421

June 19, 2013

Via Certi ted Mail — Returtt Recei t Re uested

The Hon. Bob PerciasepeActing Administrator, U.S. Environmental Protection AgencyAriel Rios Building1200 Pennsylvania Avenue, N.W.Mail Code: 1101AWashington, DC 20460

Mr. John E. Skvarla, IIISecretary, N.C. Department of Environment and Natural Resources1601 Mail Service CenterRaleigh, NC 27699-1601

Mr. James E. Rogers, President & Chief Executive OAicerDuke Energy Progress, Inc.c/o CT Corporation System150 Fayetteville St., Box 1011Raleigh, NC 27601

Mr. Allen A. Clare, Plant ManagerL.V. Sutton Steam Electric Plant801 Sutton Steam Plant RoadWilmington, NC 28401

Notice of Intent To SueFWPCA Section 505 - 33 U.S.C. II 1365

RE: 60-Day Notice of Violation by Duke Energy Progress, Inc. — L.V, Sutton Steam ElectricPlant, NPDES Permit ¹ NC0001422

To Whom It May Concern:

This letter is to notify the United States Environmental Protection Agency ("EPA"), theNorth Carolina Department of the Environment and Natural Resources ("DENR"), and DukeEnergy Progress, Inc., formerly known as Carolina Power & Light Company d/b/a ProgressEnergy Carolinas, Inc. ("Progress"), of ongoing violations of the Clean Water Act ("CWA") atthe L.V. Sutton Steam Electric Plant coal-fired electricity generating plant ("Sutton") in New

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- L.V. Sutton Steam Electric Plant # NC0001422June 19,2013

Hanover County, North Carolina, owned and operated by Progress. Cape Fear River Watch andits Cape Fear Riverkeeper, the Sierra Club, and the Waterkeeper Alliance (hereinafter, the"Conservation Groups"), and their members are very concerned about continuing seriousviolations of the CWA at Sutton that have caused and continue to cause unpermitted point sourcedischarges to flow from the coal ash lagoons into Sutton Lake and pollutants to enter NorthCarolina waters.

Pursuant to 33 U.S.C. §1365(b), the Conservation Groups hereby give notice of theirintent to sue Progress for violations of the CWA unless, within 60 days of your receipt of thisletter, Progress enters into a binding agreement to cease and remediate promptly all suchviolations.

Location of Violations

The Sutton plant is located off Highway 421 north of Wilmington in New HanoverCounty, North Carolina, adjacent to the I,IOO-acre Sutton Lake and near the Cape Fear River.The Sutton site includes two coal ash lagoons, known as the Old Ash Pond Area and New AshPond, which border Sutton Lake and discharge into it. The Old Ash Pond Area and New AshPond are marked on the map attached as Attachment A. The lagoons contain coal ash stored in awet state and the lagoons are unlined. The soil at the Sutton site is sandy, and the groundwater iswithin ten feet of the surface.

Sutton Lake is an extremely popular fishing location. It is frequented both by sportfishermen and by subsistence fishermen, who catch fish that are eaten by themselves and theirfamilies. See Mike Marsh, "Action Ramps Up at Sutton Lake," Raleigh News & Observer (Apr.4,2013) (describing the lake's parking lot as "full to overflowing" and quoting anglers drawn by"fish that were good to eat."). As explained below, the fishery at Sutton Lake is managed by theNorth Carolina Wildlife Resources Commission ("WRC") with financial support from federalfunds and grants from the U.S. Fish and Wildlife Service's Sport Fish Restoration Program.These entities encourage the public to fish at Sutton Lake and recently renovated the boat rampsto provide greater public access.

However, Progress treats Sutton Lake as a waste treatment system lagoon for dischargesfrom its coal ash lagoons. Progress has dumped and is dumping polluted water from its coal ashlagoons directly into this public fishing lake, knowing that people eat fish caught in the lake andknowing that Sutton Lake is a major regional fishing location. These discharges include coal ashsluice water, coal pile runoff, chemical metal cleaning wastes, and other wastewater. Permit No.NC0001422 at Part LA.2-4.

As a result, the lake is heavily contaminated with selenium. Decades of sampling revealsthat selenium concentrations have increased dramatically over time, such that in recent years theselenium concentrations in the surface water reached levels that cause reproductive failure of fishand waterfowl and have far exceeded those levels in the lake sediments and in fish tissue itself.These selenium sampling data are attached as Attachment B. WRC determined that thesediment and fish tissue concentrations represent a "High" hazard. Id Unsurprisingly, the mostrecent published assessment of the lake by WRC noted that largemouth bass in Sutton Lake werein poor condition, and that from 2008 to 2010, the abundance and size of the largemouth bass

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Notice of Intent — L.V. Sutton Steam Electric Plant ¹ NC0001422June 19, 2013

Hanover County, North Carolina, owned and operated by Progress. Cape Fear River Watch andits Cape Fear Riverkeeper, the Sierra Club, and the Waterkeeper Alliance (hereinafter, the"Conservation Groups"), and their members are very concerned about continuing seriousviolations of the CWA at Sutton that have caused and continue to cause unpermitted point sourcedischarges to flow from the coal ash lagoons into Sutton Lake and pollutants to enter NorthCarolina waters.

Pursuant to 33 U.S.C. Ij1365(b), the Conservation Groups hereby give notice of theirintent to sue Progress for violations of the CWA unless, within 60 days of your receipt of thisletter, Progress enters into a binding agreement to cease and remediate promptly all suchviolations.

Location of Violations

The Sutton plant is located off Highway 421 north of Wilmington in New HanoverCounty, North Carolina, adjacent to the 1,100-acre Sutton Lake and near the Cape Fear River,The Sutton site includes two coal ash lagoons, known as the Old Ash Pond Area and New AshPond, which border Sutton Lake and discharge into it. The Old Ash Pond Area and New AshPond are marked on the map attached as Attachment A. The lagoons contain coal ash stored in awet state and the lagoons are unlined. The soil at the Sutton site is sandy, and the groundwater iswithin ten feet of the surface.

Sutton Lake is an extremely popular fishing location. It is frequented both by sportfishermen and by subsistence fishermen, who catch fish that are eaten by themselves and theirfamilies. See Mike Marsh, "Action Ramps Up at Sutton Lake," Raleigh News rk Observer (Apr.4, 2013) (describing the lake's parking lot as "full to overflowing" and quoting anglers drawn by"fish that were good to eat."). As explained below, the fishery at Sutton Lake is managed by theNorth Carolina Wildlife Resources Commission ("WRC") with financial support from federalfunds and grants from the U.S. Fish and Wildlife Service's Sport Fish Restoration Program.These entities encourage the public to fish at Sutton Lake and recently renovated the boat rampsto provide greater public access.

However, Progress treats Sutton Lake as a waste treatment system lagoon for dischargesfrom its coal ash lagoons. Progress has dumped and is dumping polluted water from its coal ashlagoons directly into this public fishing lake, knowing that people eat fish caught in the lake andknowing that Sutton Lake is a major regional fishing location. These discharges include coal ashsluice water, coal pile runoff, chemical metal cleaning wastes, and other wastewater. Permit No.NC0001422 at Part I.A.2-4.

As a result, the lake is heavily contaminated with selenium. Decades of sampling revealsthat selenium concentrations have increased dramatically over time, such that in recent years theselenium concentrations in the surface water reached levels that cause reproductive failure of fishand waterfowl and have far exceeded those levels in the lake sediments and in fish tissue itself.These selenium sampling data are attached as Attachment B. WRC determined that thesediment and fish tissue concentrations represent a "High" hazard. Id. Unsurprisingly, the mostrecent published assessment of the lake by WRC noted that largemouth bass in Sutton Lake werein poor condition, and that from 2008 to 2010, the abundance and size of the largemouth bass

- L.v. Sutton Steam Electric Plant # NC0001422June 19,2013

population declined by 50 percent. N.C. Wildlife Resources Commission, Division ofInlandFisheries, 2010 Sportfish Assessment.

In addition, Progress has violated the terms of its NPDES permit - and thus violated theCWA - by allowing pollutants and coal ash materials to escape from its unlined lagoons into thegroundwater at Sutton.

These unauthorized discharges are prohibited by the Sutton NPDES permit and theCWA, and they are particularly significant in this case because the contaminated groundwater ismoving towards drinking water supply wells that provide drinking water to the economicallydisadvantaged community around Flemington Road, off Highway 421 east of the Sutton facility.These wells are referred to hereinafter as the "Flemington wells" and are marked as NHC-SW3and NHC-SW4 on Attachment A. The Flemington wells are located half a mile from the Suttoncoal ash lagoons. The Flemington community has a history of drinking water pollutionproblems: its water system is supplied by these wells because its original wells in a differentlocation were contaminated by toxic chemicals from a landfill. See Us. v. Waste Indus., Inc.,734 F.2d 159 (4th Cir. 1984) (describing contamination of drinking water supply in theFlemington community).

The contaminated groundwater at Sutton is flowing towards the Flemington wells. PhaseII Groundwater Quality Assessment for Ash Pond Impacts (July 2012) (hereinafter, "Phase IIReport") at 9. Groundwater assessments prepared by Progress and submitted to DENR havefound that the contaminated groundwater flows through sandy soil in the direction of theFlemington wells at a rate of between 109 to 339 feet per year. Phase I Groundwater QualityAssessment for Ash Pond Impacts (Feb. 2011) at 3. In 1994, DENR's Division ofEnvironmental Management Groundwater Section explained that the groundwater flow at theSutton site is "substantially influenced by the pumping activities of the New Hanover Co. wellfield [i.e., the Flemington wells]" and that "[t]hese pumping activities may result in agroundwater flow pattern that moves from the lake and ash ponds toward the well field." Letterfrom Jack Floyd, P.E. to David Goodrich (Aug. 16, 1994).

Indeed, a recent "Source Water Assessment Program Report" prepared by the NorthCarolina Division ofEnvironmental Health, Public Water Supply Section for the water systemserved by the Flemington wells assigned their "Inherent Vulnerability Rating," "ContaminantRating," and "Susceptibility Rating" the highest risk ratings and listed the Sutton facilitynumerous times as a "Potential Contaminant Source" for these wells. "Source Water AssessmentProgram Report" at 4,8-9. The report also confirms that many of the highly contaminatedgroundwater wells at Sutton are within the area that contributes groundwater to the Flemingtonwells. Id. at 2, 7.

This situation also raises an environmental justice issue. Achieving environmental justiceinvolves identifying and addressing disproportionately high and adverse human health orenvironmental effects of federal programs, policies and activities on minority and low-incomepopulations. Exec. Order No. 12898, § 101.1-101,59 C.F.R. 7629 (1994), amended in 60 Fed.Reg. 6381 (1995). Here, failure to enforce provisions of the CWA, to the detriment of the lowincome Flemington community, is an environmental justice concern.

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Notice of Intent — L.V. Sutton Steam Electric Plant II NC0001422June 19, 2013

population declined by 50 percent. N.C. Wildlife Resources Commission, Division of InlandFisheries, 2010 Sportfish Assessment.

In addition, Progress has violated the terms of its NPDES permit — and thus violated theCWA — by allowing pollutants and coal ash materials to escape from its unlined lagoons into thegroundwater at Sutton.

These unauthorized discharges are prohibited by the Sutton NPDES permit and theCWA, and they are particularly significant in this case because the contaminated groundwater ismoving towards drinking water supply wells that provide drinking water to the economicallydisadvantaged community around Flemington Road, off Highway 421 east of the Sutton facility.These wells are referred to hereinafter as the "Flemington wells" and are marked as NHC-SW3and NHC-SW4 on Attachment A. The Flemington wells are located half a mile from the Suttoncoal ash lagoons. The Flemington community has a history of drinking water pollutionproblems: its water system is supplied by these wells because its original wells in a differentlocation were contaminated by toxic chemicals from a landfill. See US. v. 8'aste Indus., Inc.,734 F.2d 159 (4th Cir. 1984) (describing contamination of drinking water supply in theFlemington community).

The contaminated groundwater at Sutton is flowing towards the Flemington wells. PhaseII Groundwater Quality Assessment for Ash Pond Impacts (July 2012) (hereinafter, "Phase IIReport") at 9. Groundwater assessments prepared by Progress and submitted to DENR havefound that the contaminated groundwater flows through sandy soil in the direction of theFlemington wells at a rate of between 109 to 339 feet per year. Phase I Groundwater QualityAssessment for Ash Pond Impacts (Feb. 2011) at 3. In 1994, DENR's Division ofEnvironmental Management Groundwater Section explained that the groundwater flow at theSutton site is "substantially influenced by the pumping activities of the New Hanover Co. wellfield [i.e., the Flemington wells]" and that "[t]hese pumping activities may result in agroundwater flow pattern that moves from the lake and ash ponds toward the well field." Letterfrom Jack Floyd, P.E. to David Goodrich (Aug. 16, 1994).

Indeed, a recent "Source Water Assessment Program Report" prepared by the NorthCarolina Division of Environmental Health, Public Water Supply Section for the water systemserved by the Flemington wells assigned their "Inherent Vulnerability Rating," "ContaminantRating," and "Susceptibility Rating" the highest risk ratings and listed the Sutton facilitynumerous times as a "Potential Contaminant Source" for these wells. "Source Water AssessmentProgram Report" at 4, 8-9. The report also confirms that many of the highly contaminatedgroundwater wells at Sutton are within the area that contributes groundwater to the Flemingtonwells. Id. at 2, 7.

This situation also raises an environmental justice issue. Achieving environmental justiceinvolves identifying and addressing disproportionately high and adverse human health orenvironmental effects of federal programs, policies and activities on minority and low-incoinepopulations. Exec. Order No. 12898, tj 101.1-101, 59 C.F.R. 7629 (1994), amended in 60 Fed.Reg. 6381 (1995). Here, failure to enforce provisions of the CWA, to the detriment of the low-income Flemington community, is an environmental justice concern.

into Sutton Lake and from the bottom and sides of the lagoons inviolation of the CWA as described in this letter.

Description of Violations

I. Unauthorized Surface Discharges to Waters of the United States

Section 301(a) of the CWA, 33 U.S.C. § 1311(a), prohibits the discharge ofpollutaI}tsfrom a point source to waters of the United States except in compliance with, among otherconditions, a National Pollutant Discharge Elimination System ("NPDES") pennit issuedpursuant to § 402 of the CWA, 33 U.S.C. § 1342. Each violation of the permit - and eachdischarge that is not authorized by the permit - is a violation of the CWA.

The CWA defines a "point source" as "any discernible, confined, and discreteconYeyance, including but not limited to any pipe, ditch, channel, tunnel, conduit, well, discretefissure, [or] container ... from which pollutants are or may be discharged." 33 U.S.c. §1362(14) (emphasis added). Under this broad definition, the discharge of pollutants frommining pits, slurry ponds, sediment basins, and mining leachate collection systems have beenheld to be point sources. See, e.g., Us. v. Earth Sciences, Inc., 599 F.2d 368,374 (10th Cir.1979) ("[W]hether from a fissure in the dirt benn or overflow of a wall, the escape of liquid fromthe confined system is from a point source."); Consolidation Coal Co. v. Costle, 604 F.2d 239,249-50 (4th Cir. 1979) (finding regulation of "discharges from coal preparation plant associatedareas," which in turn included slurry ponds, drainage ponds, and coal refuse piles, was withinCWA definition of point source), rev'd on other grounds, 449 U.S. 64 (1980).

In addition, a "point source need not be the original source of the pollutant; it need onlyconvey the pollutant to 'navigable waters.'" S. Fla. Water Mgmt. Dist. V Miccosukee Tribe ofIndians, 541 U.S. 95,105 (2004); accord W Va. Highlands Conservancy, 625 F.3d at 168(permits are required for discharges from point sources that "merely convey pollutants tonavigable waters"). Thus, ditches and channels that convey pollutants but are themselves not theoriginal source constitute point sources. This includes unintentional conveyance ofpollutants,for example, through natural-formed ditches, gullies, or fissures. See Sierra Club v. AbstonConstr. Co., 620 F.2d 41, 45 (5th Cir. 1980) (discharge from mining pits and spoil piles throughnaturally formed ditches caused by gravity flow at a coal mining site are point sources); EarthSciences, 599 F.2d 368 (holding unintentional discharges of pollutants from a mine systemdesigned to catch runoff from gold leaching site during periods of excess melting met the

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Notice of Intent — L.V. Sutton Steam Electric Plant tt NC0001422June 19, 2013

The contaminated groundwater at Sutton also flows directly into the canal that isconnected to and discharges into Sutton Lake. As a result, the coal ash lagoons are alsocontaminating Sutton Lake via this hydrologic connection, and thus constitute an additionalunpermitted point source discharge in violation of the CWA.

We are informed that Progress plans to retire its coal-fired generating operation at Suttonby the end of 2013, but has not submitted a closure plan for the ash lagoons to DENR and in factplans to leave the ash in place and continue using the ash lagoons to receive waste streams anddischarge into Sutton Lake. As long as the coal ash remains in these leaking, unlined lagoons, itwill continue to discharge into Sutton Lake and from the bottom and sides of the lagoons inviolation of the CWA as described in this letter.

Descri tion of Violations

I. Unauthorized Surface Discharges to Waters of the United States

Section 301(a) of the CWA, 33 U.S.C. $ 1311(a), prohibits the discharge of pollutantsfrom a point source to waters of the United States except in compliance with, among otherconditions, a National Pollutant Discharge Elimination System ("NPDES") permit issuedpursuant to $ 402 of the CWA, 33 U.S.C. $ 1342. Each violation of the permit — and eachdischarge that is not authorized by the permit — is a violation of the CWA.

The CWA defines a "point source" as "any discernible, confined, and discreteconveyance, including but not limited to any pipe, ditch, channel, tunnel, conduit, well, discretefissure, [or) container... from which pollutants are or may be discharged." 33 U.S.C. g1362(14) (emphasis added). Under this broad definition, the discharge of pollutants frommining pits, slurry ponds, sediment basins, and mining leachate collection systems have beenheld to be point sources. See, e.g., US. v. Earth Sciences, Inc., 599 F.2d 368, 374 (10th Cir.1979) ("[W]hether from a fissure in the dirt berm or overflow of a wall, the escape of liquid fromthe confined system is from a point source."); Consolidation Coal Co. v. Costle, 604 F.2d 239,249-50 (4th Cir. 1979) (finding regulation of "discharges from coal preparation plant associatedareas," which in turn included slurry ponds, drainage ponds, and coal refuse piles, was withinCWA definition of point source), rev 'd on other grounds, 449 U.S. 64 (1980).

In addition, a "point source need not be the original source of the pollutant; it need onlyconvey the pollutant to 'navigable waters.'" S. Fla. Water Mgmt. Dist. V. Miccosukee Tribe ofIndians, 541 U.S. 95, 105 (2004); accord IV. Va. Highlands Conservancy, 625 F.3d at 168

(permits are required for discharges from point sources that "merely convey pollutants tonavigable waters"). Thus, ditches and channels that convey pollutants but are themselves not theoriginal source constitute point sources. This includes unintentional conveyance ofpollutants,for example, through natural-formed ditches, gullies, or fissures. See Sierra Club v. AbstonConstr. Co., 620 F.2d 41, 45 (5th Cir. 1980) (discharge from mining pits and spoil piles throughnaturally formed ditches caused by gravity flow at a coal mining site are point sources); EarthSciences, 599 F.2d 368 (holding unintentional discharges of pollutants Irom a mine systemdesigned to catch runoff from gold leaching site during periods of excess melting met the


statutory definition of a point source); N. C. Shellfish Growers Ass 'n v. Holly Ridge Assocs.,LLC, 278 F. Supp. 2d 654, 679 (E.D.N.C. 2003) ("Notwithstanding that it may result from suchnatural phenomena as rainfall and gravity, the surface run-off of contaminated waters, oncechanneled or collected, constitutes discharge by a point source."); 0 'Leary v. Moyer's Landfill.Inc., 523 F. Supp. 642,655 (RD. Pa. 1981) (intent of the discharging entity is irrelevant).

In this case, Sutton Lake is a water of the United States, but Progress is erroneouslytreating it as an internal component of its wastewater treatment system. Accordingly, Progress'spoint source discharges of toxic pollutants into Sutton Lake do not comply with the CWA.

A. Sutton Lake Is a Water of the United States.

The creation, management, permitting, and use by the public of Sutton Lake all clearlydemonstrate that the lake is a water of the United States.

First, Sutton Lake was created by damming Catfish Creek, a navigable water of theUnited States. 40 C.F.R. § 122.2 (definition of"Waters ofthe United States" at (a), (e)). The1971 deed between the State ofNorth Carolina and Carolina Power & Light Companyauthorizing the creation of Sutton Lake (Attachment C) confirms that Catfish Creek was anavigable stream. Attachment C at 1. Thus, because Sutton Lake is an "impoundment[] ofwaters otherwise defined as waters of the United States," it is itself a water of the United States.40 C.F.R. § 122.2 ("waters of the United States" at (d)).

Further, when Sutton Lake was created, Progress agreed and the State required thatSutton Lake be managed as a public fishery. When the Lake was created, an easement signed bythe Governor ofNorth Carolina and by Progress, previously known as Carolina Power & LightCompany, provided that Sutton Lake is required to be managed as a public fishery. AttachmentC at I, 3. Progress agreed under the terms of the easement "to allow public access to the coolingwater reservoir and to provide a public ramp for launching boats" and "to place the fisherymanagement of the reservoir under the jurisdiction of the North Carolina Wildlife ResourcesCommission." Id. at 3. WRC has pointed out that "the Commission has historically managedthe lake as a public resource" and it has advocated for according the lake the protections requiredfor a water of the state. Memorandum re State Stormwater Permit Application from Robert L.Curry to Rick Shiver, Division of Water Quality (Feb. 16,2011). The construction of SuttonLake was authorized by a statute passed by the North Carolina General Assembly, which alsomandates that "fishery management in the reservoir be under the jurisdiction ofthe WildlifeResources Commission." Chapter 462, Session Laws of 1971.

Further, as shown by the statute creating the Lake and the easement signed by theGovernor, the State of North Carolina has acknowledged repeatedly that Sutton Lake is a waterof the State and not a wastewater treatment facility. The most recent permit issued by the state toProgress for the Sutton facility lists Sutton Lake multiple times as a Class "c" water of the State.Stormwater Permit #SW8110201 (Aug. 2, 2012), attached as Attachment D, at ~~ 6-7. Progressdid not object to this permit and is bound by its terms. Waters of the State are defined as "anystream, river, brook, swamp, lake, sound, tidal estuary, bay, creek, reservoir, waterway, or otherbody or accumulation of water, whether surface or underground, public or private, or natural orartificial, that is contained in, flows through, or borders upon any portion of this state ...." N.C.

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Notice of Intent — L.V. Sutton Steam Electric P!ant ¹ NC0001422June 19, 2013

statutory definition of a point source); N.C. Shellfish Growers Ass 'n v. Holly Ridge Assocs.,LLC, 278 F. Supp. 2d 654, 679 (E.D.N.C. 2003) ("Notwithstanding that it may result from suchnatural phenomena as rainfall and gravity, the surface run-off of contaminated waters, oncechanneled or collected, constitutes discharge by a point source."); 0'Leary v. Moyer 's Landfill,Inc., 523 F. Supp. 642, 655 (E.D. Pa. 1981) (intent of the discharging entity is irrelevant).

In this case, Sutton Lake is a water of the United States, but Progress is erroneouslytreating it as an internal component of its wastewater treatment system. Accordingly, Progress'spoint source discharges of toxic pollutants into Sutton Lake do not comply with the CWA.

A. Sutton Lake Is a Water of the United States.

The creation, management, permitting, and use by the public of Sutton Lake all clearlydemonstrate that the lake is a water of the United States.

First, Sutton Lake was created by damming Catfish Creek, a navigable water of theUnited States. 40 C.F.R. $ 122.2 (definition of "Waters of the United States" at (a), (e)). The1971 deed between the State ofNorth Carolina and Carolina Power & Light Companyauthorizing the creation of Sutton Lake (Attachment C) confirms that Catfish Creek was anavigable stream. Attachment C at 1. Thus, because Sutton Lake is an "impoundment[] ofwaters otherwise defined as waters of the United States," it is itself a water of the United States.40 C.F.R. tj 122.2 ("waters of the United States" at (d)).

Further, when Sutton Lake was created, Progress agreed and the State required thatSutton Lake be managed as a public fishery. When the Lake was created, an easement signed bythe Governor ofNorth Carolina and by Progress, previously known as Carolina Power 4 LightCompany, provided that Sutton Lake is required to be managed as a public fishery, AttachmentC at I, 3. Progress agreed under the terms of the easement "to allow public access to the coolingwater reservoir and to provide a public ramp for launching boats" and "to place the fisherymanagement of the reservoir under the jurisdiction of the North Carolina Wildlife ResourcesCommission.'* Jd. at 3. WRC has pointed out that "the Commission has historically managedthe lake as a public resource" and it has advocated for according the lake the protections requiredfor a water of the state. Memorandum re State Stormwater Permit Application from Robert L.Curry to Rick Shiver, Division of Water Quality (Feb. 16, 2011). The construction of SuttonLake was authorized by a statute passed by the North Carolina General Assembly, which alsomandates that "fishery management in the reservoir be under the jurisdiction of the WildlifeResources Commission." Chapter 462, Session Laws of 1971.

Further, as shown by the statute creating the Lake and the easement signed by theGovernor, the State ofNorth Carolina has acknowledged repeatedly that Sutton Lake is a waterof the State and not a wastewater treatment facility. The most recent permit issued by the state toProgress for the Sutton facility lists Sutton Lake multiple times as a Class "C" water of the State.Stormwater Permit ¹SW8 110201 (Aug. 2, 2012), attached as Attachment D, at $f 6-7. Progressdid not object to this permit and is bound by its terms. Waters of the State are defined as "anystream, river, brook, swamp, lake, sound, tidal estuary, bay, creek, reservoir, waterway, or otherbody or accumulation of water, whether surface or underground, public or private, or natural orartificial, that is contained in, tlows through, or borders upon any portion of this state...." N.C.


Gen. Stat. 143-212(6). Because Sutton Lake is a water of the State, the lake is not a wastewatertreatment facility.

Further, the Office ofthe Attorney General of the State of North Carolina has concludedthat Sutton Lake is a water of the state. Email from Kathryn Jones Cooper to Linda Willis (Jan.25,2011) (Attachment E).

Indeed, Progress has two other public lakes at electricity generating facilities in NorthCarolina, Lake Julian in Asheville and Harris Lake near Holly Springs. Both are man-madelakes created as cooling reservoirs for other Progress power plants. Both of these lakes areclassified and treated as waters ofthe State and the United States, just as Sutton Lake is a waterofNorth Carolina and of the United States.

In addition, the Fourth Circuit has affirmed that waters of the United States remain watersof the United States even if they are impounded for waste treatment. West Virginia Coal Ass 'n v.Reilly, 932 F.2d 964 (4th Cir. 1991), aff'g 728 F. Supp.1276, 1290 (S.D. W.Va. 1989) (wastetreatment exception to definition of waters of the Upited States does not apply to treatment pondsconstructed in United States waters).

Moreover, the fishery at Sutton Lake is managed using federal funds as part of the U.S.Fish and Wildlife Service's Sport Fish Restoration Program, which supports fishery projects,boating access, and aquatic education. In addition to years of fishery surveys in the lake fundedwith federal dollars, the boat ramps at Sutton Lake were recently restored, and a floating fishingpier installed, with grant funding from the Sport Fish Restoration Program in order to "providethe public with better fishing access to Sutton Lake." Information on these activities is attachedas Attachment F. See 40 C.F.R. § 122.2 (definition of "waters of the United States" at (a), (c)).

It is plain, then, that according to the terms of its easement and the statute authorizing theLake, the State's permitting of the lake, its management as a public fishery (including withfederal funds), and common sense, Sutton Lake is a water ofthe State and a water of the UnitedStates subject to the full protections of the CWA.

B. Progress's NPDES Permit Does Not Authorize Discharges Into This Water ofthe United States.

The Sutton NPDES permit authorizes only one point source discharge to waters of theUnited States: the discharge from Outfall 001 into the Cape Fear River. Permit No. NC0001422at Part LA.1.

Accordingly, Progress's point source discharges from its coal ash lagoons into SuttonLake, consisting of ash sluice water, coal pile runoff, low volume wastes, and chemical metalcleaning waste from Outfalls 002, 003, and 004, are not authorized under the CWA. Theseunauthorized discharges contain toxic pollutants including arsenic, selenium, mercury, antimony,cadmium, chromium, lead, and zinc; as well as other pollutants including sulfate, copper,ammonia, nitrogen, phosphorus, iron, manganese, total dissolved solids, and total suspendedsolids.

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Gen. Stat. 143-212(6). Because Sutton Lake is a water of the State, the lake is not a wastewatertreatment facility.

Further, the Office of the Attorney General of the State of North Carolina has concludedthat Sutton Lake is a water of the state. Email from Kathryn Jones Cooper to Linda Willis (Jan.25, 2011) (Attachment E).

Indeed, Progress has two other public lakes at electricity generating facilities in NorthCarolina, Lake Julian in Asheville and Harris Lake near Holly Springs. Both are man-madelakes created as cooling reservoirs for other Progress power plants. Both of these lakes areclassified and treated as waters of the State and the United States, just as Sutton Lake is a waterofNorth Carolina and of the United States.

In addition, the Fourth Circuit has affirmed that waters of the United States remain watersof the United States even if they are impounded for waste treatment. West Virginia Coal Ass 'n v.

Reilly, 932 F.2d 964 (4th Cir. 1991), aff'g 728 F, Supp.1276, 1290 (S.D. W.Va. 1989) (wastetreatment exception to definition of waters of the Un!ted States does not apply to treatment pondsconstructed in United States waters).

Moreover, the fishery at Sutton Lake is managed using federal funds as part of the U.S.Fish and Wildlife Service's Sport Fish Restoration Program, which supports fishery projects,boating access, and aquatic education. In addition to years of fishery surveys in the lake fundedwith federal dollars, the boat ramps at Sutton Lake were recently restored, and a floating fishingpier installed, with grant funding from the Sport Fish Restoration Program in order to "providethe public with better fishing access to Sutton Lake." Information on these activities is attachedas Attachment F. See 40 C.F.R. $ 122.2 (definition of"waters of the United States" at (a), (c)).

It is plain, then, that according to the terms of its easement and the statute authorizing theLake, the State's permitting of the lake, its management as a public fishery (including withfederal funds), and common sense, Sutton Lake is a water of the State and a water of the UnitedStates subject to the full protections of the CWA.

B. Progress's NPDES Permit Does Not Authorize Discharges Into This Water ofthe United States.

The Sutton NPDES permit authorizes only one point source discharge to waters of theUnited States: the discharge from Outfall 001 into the Cape Fear River. Permit No. NC0001422at Part I.A.I.

Accordingly, Progress's point source discharges from its coal ash lagoons into SuttonLake, consisting of ash sluice water, coal pile runoff, low volume wastes, and chemical metalcleaning waste from Outfalls 002, 003, and 004, are not authorized under the CWA. Theseunauthorized discharges contain toxic pollutants including arsenic, selenium, mercury, antimony,cadmium, chromium, lead, and zinc; as well as other pollutants including sulfate, copper,ammonia, nitrogen, phosphorus, iron, manganese, total dissolved solids, and total suspendedsolids.


The Sutton NPDES permit treats the discharges of these waste streams Irom the coal ashlagoons into Sutton Lake as internal outfalls within a waste treatment system. It contains nolimits for toxic pollutants such as selenium and arsenic. Thus, by its own terms, the permit doesnot protect water quality in Sutton Lake: the Fact Sheet for the permit states that several of these"internal" waste streams are "not a direct discharge so no parameters are water quality limited"to protect Sutton Lake. DENR/DWQ Fact Sheet for NPDES Permit Development, NPDES No.NC0001422, at 2 (emphasis added).

Because the permit does not protect water quality, and instead treats Sutton Lake as aninternal component of a wastewater treatment system, it does not and cannot validly authorizeProgress's highly contaminated toxic discharges to this water of the United States. Where thepermitting authority "has failed to fulfill its duties under the Act by issuing NPDES permits thatdo not comply with the Clean Water Act and its implementing regulations," the permit is notvalid. Miccosu/ree Tribe ofIndians ofFla. v. US., 706 F. Supp. 2d 1296, 1302 (S.D. Fla. 2010),a+d 498 Fed. App'x 899 (11th Cir. 2012) (per curiam).

It is beyond dispute that an NPDES permit cannot deliberately fail to protect waterquality by erroneously declaring a water of the United State's, a water ofNorth Carolina, and apublic fishing lake to be a waste treatment facility. Such an absurd result would directlycontradict the CWA's objective of restoring and maintaining the chemical, physical, andbiological integrity of the Nation's waters and the NPDES permitting program's goal ofeliminating discharges of pollutants into navigable waters. 33 U.S.C. $ 1251(a).

Moreover, Progress's unauthorized discharges into Sutton Lake have had direconsequences. The selenium concentrations in Sutton Lake's surface water, and especially in thefish tissue and lake sediments, have been determined by WRC to pose a high hazard to thefishery due to reproductive failure in the fish population, as described above. Progress's coal ashpollution is clearly harming the population of fish available to those who depend on it for foodand recreational fishing. WRC also found the selenium contamination had placed waterfowl athigh risk of reproductive failure.

Fish absorb selenium through their gills or by eating contaminated food sources such asworms. Barbara Gottlieb, er al., Coal Ash. The Toxic Threat lo Our Health and Environment(Sept. 2010), at 4. Extremely high levels of selenium have been found to accmnulate in fish andamphibians living in coal ash-contaminated waters and wetlands, if they survive exposure to thetoxin. Id. As confirmed by laboratory studies, selenium accumulation can cause developmentalabnormalities in fish and amphibians and has led to the death of entire local fish populations. Id.Selenium is bioaccumulative, meaning it is passed up the food chain in increasingconcentrations, and excessive amounts have been found in water snakes, small mammals, birdsand humans. Id

This failure to enforce provisions of the CWA also raises an additional environmentaljustice issue in relation to human consumption of fish. Minority fishermen have been observedcatching fish on the dock at Sutton Lake, and the minority population in a half-mile, mile, 2-mile and 3-mile radius of Sutton Steam Station is significantly higher than the state or countywide average. Executive Order 12898 specifically provides, with regard to subsistence fishing,

to doso indefinitely - due to storm events and other waste streams.

These discharges into Sutton Lake are ongoing and will continue after the date ofthis letter and the subsequent ming of a lawsuit.

II. Unauthorized Discharges to State Waters

Progress also has violated the CWA by violating an express condition in the SuttonNPDES permit barring the pollutants from the coal ash 'lagoons from entering North Carolinawaters and navigable waters. Progress's NPDES permit, Part ILB.l, states that "[t]he Permitteemust comply with all conditions of this permit. Any permit noncompliance constitutes aviolation ofthe CWA ... and is grounds for enforcement action ..." Permit No. NC0001422(emphasis added). 33 U.S.C. §§ 1365 (t)(6),1342(a); 40 CFR § 122.41 (a)) ("Any permitnoncompliance constitutes a violation of the Clean Water Act and is grounds for enforcementaction."); Friends ofthe Earth, Inc. v. Gaston Copper Recycling Corp., 204 F.3d 149, 152 (4thCir. 2000) (confirming citizens are "authorized to bring suit against any NPDES permit holderwho has allegedly violated its permit.").

Progress has violated the provision of its NPDES permit titled "Removed Substances,"which prohibits the entrance of pollutants from the coal ash lagoons into North Carolina watersor navigable waters. Part II.C.6 of the permit requires that

Solids, sludges, filter backwash, or other pollutants removed in the course oftreatment or control of wastewaters shall be utilized/disposed of ... in a mannersuch as to prevent any pollutant from such materials from entering waters of theState or naVigable waters of the United States except as permitted by theCommission.

(emphasis added). The Sutton lagoons receive and treat various waste streams, including coalash transport water, coal pile runoff, and chemical metal cleaning wastes. These waste streamsare treated by sedimentation in the ash lagoons. Pollutants that have been removed in the courseof treatment are stored in both lagoons.

The "Removed Substances" provision of the Sutton NPDES permit prohibits thepermittee from allowing coal ash contaminants removed in the course of treatment (i.e., settling)as well as coal pile runoff and other wastewaters (all of which discharge to the ash lagoons at

8


that where an agency action may affect fish, vegetation, or wildlife, that agency action may alsoaffect subsistence patterns of consumption and indicate the potential for disproportionately highand adverse human health or environmental effects on low-income and minority populations.Executive Order 12898 $ 4 — 401.

In addition to the severe selenium contamination in the lake, DENR's Division of WaterQuality has noted that "[a]lgal blooms in the cooling reservoir (Sutton Lake) are occurring morefrequently" due to un-reacted ammonia in the ash sluice water. Letter from Linda Willis to JeffPoupart (Mar. 4, 2011). However, the Sutton NPDES permit contains no limits for ammoniadischarges into the lake and requires ammonia monitoring only when ash is actively sluiced intothe lagoons, even though the lagoons discharge regularly into the lake — and will continue to doso indefinitely — due to storm events and other waste streams.

These discharges into Sutton Lake are ongoing and will continue after the date ofthis letter and the subsequent filing of a lawsuit.

II. Unauthorized Discharges to State Waters

Progress also has violated the CWA by violating an express condition in the SuttonNPDES permit barring the pollutants from the coal ash 'lagoons from entering North Carolinawaters and navigable waters. Progress's NPDES permit, Part II.B.1, states that "[t]he Permitteemust comply with all conditions of this permit. Any permit noncompliance constitutes aviolation ofthe CWA... and is grounds for enforcement action..." Permit No. NC0001422(emphasis added). 33 V.S.C. $ $ 1365 (t)(6),1342(a); 40 CFR tt 122.41(a)) ("Any permitnoncompliance constitutes a violation of the Clean Water Act and is grounds for enforcementaction."); Friends of the Earth, Inc. v. Gaston Copper Recycling Corp., 204 F.3d 149, 152 (4thCir. 2000) (confirming citizens are "authorized to bring suit against any NPDES permit holderwho has allegedly violated its permit.").

Progress has violated the provision of its NPDES permit titled "Removed Substances,"which prohibits the entrance of pollutants from the coal ash lagoons into North Carolina watersor navigable waters. Part II.C.6 of the permit requires that

Solids, sludges, filter backwash, or other pollutants removed in the course oftreatment or control of wastewaters shall be utilized/disposed of... in a mannersuch as to prevent any pollutantPom such materials from entering waters of theState or navigable waters of'he United States except as permitted by theCommission.

(emphasis added). The Sutton lagoons receive and treat various waste streams, including coalash transport water, coal pile runoff, and chemical metal cleaning wastes. These waste streamsare treated by sedimentation in the ash lagoons. Pollutants that have been removed in the courseof treatment are stored in both lagoons.

The "Removed Substances" provision of the Sutton NPDES permit prohibits thepermittee from allowing coal ash contaminants removed in the course of treatment (i.e., settling)as well as coal pile runoff and other wastewaters (all of which discharge to the ash lagoons at

- L.V. Sutton Stearn Electric Plant # NC0001422June 19,2013

Sutton) to enter the waters ofNorth Carolina. Groundwater is included in the North Carolinapollution control statute's definition ofwaters of the State. N.C. Gen. Stat. § 143-212(6).

This provision is a logical requirement ofoperating a permitted wastewater treatmentfacility. A wastewater treatment facility exists in order to remove substances from water beforethe water is discharged into the state's and the nation's waters. It does not serve its basicfunction as a wastewater treatment facility if it removes substances in the course of treatment andthen discharges them otherwise into the waters of the state or the nation. The facility certainlyfails its basic function of wastewater treatment if it leaks or seeps and thereby dischargesremoved substances into groundwater or navigable waters.

In this case, pollutants, solids, and sludges from Progress's Sutton coal ash lagoons havefor years been entering State waters and navigable waters. The lagoons have leached, and willcontinue to leach, these substances and pollutants from the bottom and sides of both unlinedlagoons into the groundwater at Sutton, as described in the "Location of Violations" sectionabove. For years, pollutants from the coal ash have been found in groundwater under, at, andaround Sutton. These substances include toxic pollutants including arsenic, selenium, mercury,antimony, cadmium, chromium, lead, and zinc; as well as other pollutants including sulfate,copper, iron, manganese, nitrate, and total dissolved solids. Groundwater monitoring well datafrom the site show the unlined ash lagoons have caused numerous pollutants to exceed theirrespective standards, including:

• Arsenic at 34 times the standard• Manganese at 47 times the standard• Iron at 27 times the standard• Boron at 4 times the standard• Sulfate over 3 times the standard• Thalliurn at 3 times the standard• Selenium at more than twice the standard• Total Dissolved Solids at twice the standard• Chloride• Antimony• Lead

In addition, the groundwater is acidic, with a pH as low as 4.5. The groundwater data for theexceedences listed above are attached as Attachment G.

Arsenic is a known carcinogen that causes multiple forms ofcancer in humans. It is alsoa toxic pollutant, 40 C.F.R. § 401.15, and a priority pollutant, 40 C.F.R. Part 423 App'x A.Arsenic is also associated with non-cancer health effects of the skin and the nervous system.Gottlieb, supra, at 2. According to the Agency for Toxic Substances and Disease Registry(ATSDR), there is some evidence that in childhood, long-term exposure to arsenic may result inlower IQ scores and exposure to arsenic in the womb and early childhood may increase mortalityin young adults. Id

9

Notice of Intent — L.V. Sutton Steam Electric Plant 0 NC0001422June 19, 2013

Sutton) to enter the waters ofNorth Carolina. Groundwater is included in the North Carolinapollution control statute's definition ofwaters of the State. N.C. Gen. Stat. I'I 143-212(6).

This provision is a logical requirement of operating a permitted wastewater treatmentfacility. A wastewater treatment facility exists in order to remove substances from water beforethe water is discharged into the state's and the nation's waters. It does not serve its basicfunction as a wastewater treatment facility if it removes substances in the course of treatment andthen discharges them otherwise into the waters of the state or the nation. The facility certainlyfails its basic function of wastewater treatment if it leaks or seeps and thereby dischargesremoved substances into groundwater or navigable waters.

In this case, pollutants, solids, and sludges from Progress's Sutton coal ash lagoons havefor years been entering State waters and navigable waters. The lagoons have leached, and willcontinue to leach, these substances and pollutants fiom the bottom and sides ofboth unlinedlagoons into the groundwater at Sutton, as described in the "Location of Violations" sectionabove. For years, pollutants Irom the coal ash have been found in groundwater under, at, andaround Sutton. These substances include toxic pollutants including arsenic, selenium, mercury,antimony, cadmium, chromium, lead, and zinc; as well as other pollutants including sulfate,copper, iron, manganese, nitrate, and total dissolved solids. Groundwater monitoring well datafrom the site show the unlined ash lagoons have caused numerous pollutants to exceed theirrespective standards, including:

~ Arsenic at 34 times the standard~ Manganese at 47 times the standard~ Iron at 27 times the standard~ Boron at 4 times the standard~ Sulfate over 3 times the standard~ Thallium at 3 times the standard~ Selenium at more than twice the standard~ Total Dissolved Solids at twice the standard~ Chloride~ Antimony~ Lead

In addition, the groundwater is acidic, with a pH as low as 4.5. The groundwater data for theexceedences listed above are attached as Attachmerrt G.

Arsenic is a known carcinogen that causes multiple forms ofcancer in humans. It is alsoa toxic pollutant, 40 C.F.R. $ 401.15, and a priority pollutant, 40 C.F.R. Part 423 App'x A.Arsenic is also associated with non-cancer health effects of the skin and the nervous system.Gottlieb, supra, at 2. According to the Agency for Toxic Substances and Disease Registry(ATSDR), there is some evidence that in childhood, long-term exposure to arsenic may result inlower IQ scores and exposure to arsenic in the womb and early childhood may increase mortalityin young adults. Id.

thallimn for several weeks.

Selenium is an essential element, but it is also listed as a toxic pollutant, 40 C.F.R. §401.15, and excess exposure can cause a chemical-specific condition known as selenosis, withsymptoms that include hair and nail loss.

Antimony is listed as a toxic pollutant, 40 C.F.R. § 401.15, and is associated withreduced lifespan, decreased blood glucose, and altered cholesterol in rodents, and with vomitingand cardiac and respiratory effects in hmnans.

Lead is a very potent neurotoxicant that is highly damaging to the nervous system.Health effects associated with exposure to lead include, but are not limited to, neurotoxicity,developmental delays, hypertension, impaired hearing acuity, impaired hemoglobin synthesis,and male reproductive impairment. Importantly, many of lead's health effects may occurwithout overt signs of toxicity. Lead is also classified by the EPA as a "probable hmnancarcinogen."

Concurrent exposure to multiple contaminants may intensify existing effects of individualcontaminants, or may give rise to interactions and synergies that create new effects. Whereseveral coal ash contaminants share a common mechanism oftoxicity or affect the same bodyorgan or system, exposure to several contaminants concurrently produces a greater chance ofincreased risk to health.

10


Manganese is known to be toxic to the nervous system. Manganese concentrationsgreater than 50 ug/L render water unusable by discoloring the water, giving it a metallic taste,and causing black staining. Exposure to high levels can affect the nervous system; very highlevels may impair brain development in children. The manganese sampled at Sutton wasmeasured at 2,360 ug/L, or 47 times North Carolina's standard of 50 ug/L.

Iron can render water unusable by imparting a rusty color and a metallic taste and causingsedimentation and staining; to prevent these effects the EPA has set a secondary drinking waterstandard of 300 ug/L. Iron was measured at 8,050 ug/L, 27 times the standard.

Oral exposure to boron has led to developmental and reproductive toxicity in multiplespecies. Specific effects include testicular degeneration, reduced sperm count, reduced birthweight, and birth defects. Boron was measured at 2,790 ug/L, or four times the state standard of700 ug/L.

High concentrations of sulfates in drinking water can cause diarrhea; the U.S. EPA hasestablished a secondary maximum contaminant level ("MCL") of 250 mg/L and a health-basedadvisory of 500 mg/L. Groundwater with sulfate concentrations above the North Carolinagroundwater standard of 250 mg/L is therefore unusable and potentially unsafe. Concentrationsof 814 mg/L were found at Sutton.

Thallium is a toxic pollutant, 40 C.F.R. tJ 401.15, and exposure to high levels of thalliumcan result in harmful health effects. Studies in rats have shown adverse developmental effectsfrom exposure to high levels of thallium, and some adverse effects on the reproductive systematter ingesting thallium for several weeks.

Selenium is an essential element, but it is also listed as a toxic pollutant, 40 C.F.R. $401.15, and excess exposure can cause a chemical-specific condition known as selenosis, withsymptoms that include hair and nail loss.

Antimony is listed as a toxic pollutant, 40 C.F.R. $ 401.15, and is associated withreduced lifespan, decreased blood glucose, and altered cholesterol in rodents, and with vomitingand cardiac and respiratory effects in humans.

Lead is a very potent neurotoxicant that is highly damaging to the nervous system.Health effects associated with exposure to lead include, but are not limited to, neurotoxicity,developmental delays, hypertension, impaired hearing acuity, impaired hemoglobin synthesis,and male reproductive impairment. Importantly, many of lead's health effects may occurwithout overt signs of toxicity. Lead is also classified by the EPA as a "probable humancarcinogen."

Concurrent exposure to multiple contaminants may intensify existing effects of individualcontaminants, or may give rise to interactions and synergies that create new effects. Whereseveral coal ash contaminants share a common mechanism of toxicity or affect the same bodyorgan or system, exposure to several contaminants concurrently produces a greater chance ofincreased risk to health.

10

ofIntent - L.V. Sutton Steam Electric Plant # NC0001422June 19,2013

Both of the Sutton coal ash settling lagoons are a wastewater treatment system; theirpurpose is to treat and remove solids, sludges, substances, materials, and pollutants. Instead, inviolation ofan express provision of its permit, Progress has been and is allowing the unpermittedand uncontrolled entrance of solids, sludges, substances, materials, and pollutants, includingtoxic metals, into the waters of the State and navigable waters of the United States. Progress'sactions are a straightforward violation of this straightforward provision of the permit.

Accordingly, Progress's unauthorized discharges of solids, sludges, and pollutants toState waters and navigable waters constitute violations of its NPDES permit and thus of theCWA.

This prohibition of discharges of pollutants from the two Sutton coal ash lagoons to Statewaters, including ground waters of the State, is enforceable through a citizen suit under theCWA. See 33 U.S.C. § 1370 (allowing states to adopt and enforce more stringent limitations inCWA permits than the federal government); 33 U.S.C. § 1311 (b)(1 )(B) (stating that morestringent state limitations in furtherance of the objective of the CWA include "those necessary tomeet water quality standards"); Nw. Envtl. Advocates v. City ofPortland, 56 F.3d 979, 986 (9thCir. 1995) ("The plain language of CWA § 505 authorizes citizens to enforce all permitconditions"); Culbertson v, Coats Am., 913 F. Supp. 1572, 1581 (N.D. Ga. 1995) (holding that"[t]he CWA authorizes citizen suits for the enforcement of all conditions ofNPDES permits").

In stirn, by violating its NPDES permit and the CWA, Progress has placed at risk thedrinking water supply for an economically disadvantaged community with a history ofdrinkingwater supply contamination.

Because these permit violations and discharges from the unlined lagoons to thewaters of the State are continuous and ongoing, they will continue after the date of thisletter and the subsequent filing of a lawsuit.

III. Discharges through Close Hydrologic Flow into Sutton Lake

The contaminated groundwater at Sutton is also discharging into Sutton Lake.Potentiometric maps of the groundwater gradients at Sutton, produced for Progress in 2011 and2012, show that the contaminated groundwater beneath and alongside the coal ash lagoons flowsdirectly into the canal that runs between the power plant and the coal ash lagoons. Phase IIReport, Figs. 5A-6B (Attachment H) (showing blue contour lines representing groundwaterelevation above sea level; the groundwater flows from the higher-numbered contour lines to thelower-numbered contour lines). The canal is connected to and flows into Sutton Lake. Id.These ongoing discharges of pollutants into the lake are not authorized by Progress's NPDESpermit or by any other permit.

These hydrologically connected discharges to the lake constitute an additional violationof the "Removed Substances" provision of the Sutton NPDES permit addressed in Part II.

11


Both of the Sutton coal ash settling lagoons are a wastewater treatment system; theirpurpose is to treat and remove solids, sludges, substances, materials, and pollutants. Instead, inviolation ofan express provision of its permit, Progress has been and is allowing the unpermittedand uncontrolled entrance of solids, sludges, substances, materials, and pollutants, includingtoxic metals, into the waters of the State and navigable waters of the United States. Progress'sactions are a straightforward violation of this straightforward provision of the permit.

Accordingly, Progress's unauthorized discharges of solids, sludges, and pollutants toState waters and navigable waters constitute violations of its NPDES permit and thus of theCWA.

This prohibition of discharges ofpollutants from the two Sutton coal ash lagoons to Statewaters, including ground waters of the State, is enforceable through a citizen suit under theCWA. See 33 U.S.C. tj 1370 (allowing states to adopt and enforce more stringent limitations inCWA permits than the federal government); 33 U.S.C. tj 1311(b)(1)(B) (stating that morestringent state limitations in furtherance of the objective of the CWA include "those necessary tomeet water quality standards"); Nw, Envtl. Advocates v. City ofPortland, 56 F.3d 979, 986 (9thCir. 1995) ("The plain language of CWA $ 505 authorizes citizens to enforce all permitconditions"); Culbertson v, Coats Am., 913 F. Supp. 1572, 1581 (N.D. Ga. 1995) (holding that"[t]he CWA authorizes citizen suits for the enforcement of all conditions ofNPDES permits").

In su'm, by violating its NPDES permit and the CWA, Progress has placed at risk thedrinking water supply for an economically disadvantaged community with a history of drinkingwater supply contamination.

Because these permit violations and discharges from the unlined lagoons to thewaters of the State are continuous and ongoing, they will continue after the date of thisletter and the subsequent filing of a lawsuit.

III. Discharges through Close Hydrologic Flow into Sutton Lake

The contaminated groundwater at Sutton is also discharging into Sutton Lake.Potentiometric maps of the groundwater gradients at Sutton, produced for Progress in 2011 and2012, show that the contaminated groundwater beneath and alongside the coal ash lagoons flowsdirectly into the canal that runs between the power plant and the coal ash lagoons. Phase IIReport, Figs. 5A-6B (Attachment H) (showing blue contour lines representing groundwaterelevation above sea level; the groundwater flows from the higher-numbered contour lines to thelower-numbered contour lines). The canal is connected to and flows into Sutton Lake. Id.These ongoing discharges ofpollutants into the lake are not authorized by Progress's NPDESpermit or by any other permit.

These hydrologically connected discharges to the lake constitute an additional violationof the "Removed Substances" provision of the Sutton NPDES permit addressed in Part II.

11


But in addition, these discharges via hydrologically-connected groundwater to navigablesurface waters of the United States are unpermitted point source discharges ofpollutants and thusconstitute a third, independent violation of the CWA.

The CWA prohibits "any addition of any pollutant to navigable waters from any pointsource." 33 U.S.C. $ 1362(12)(A). "[T]he touchstone for finding a point source is the ability toidentify a discrete facility from which pollutants have escaped." Wash. Wilderness Coal. v.

Hecla Mining Co., 870 F. Supp. 983, 987 (E.D. Wash. 1994).

Because there is a direct hydrologic connection between the coal ash lagoons and SuttonLake, Progress's unpermitted discharges ofpollutants from the lagoons via the groundwater tothe lake, as well as the lagoons themselves, are point sources that violate the CWA. As with thegroundwater contamination described in Part II, these pollutants include toxics including arsenic,selenium, mercury, antimony, cadmium, chromium, lead, and zinc; as well as other pollutantsincluding sulfate, copper, iron, manganese, nitrate, and total dissolved solids.

EPA has stated repeatediy that the CWA applies to such hydrologically-connectedgroundwater discharges. 66 Fed. Reg. 2960, 3015 (Jan. 12, 2001) ("EPA is restating that theAgency interprets the Clean Water Act to apply to discharges ofpollutants from a point sourcevia ground water that has a direct hydrologic connection to surface water."). Accord 56 Fed.Reg. 64876-01, 64892 (Dec. 12, 1991) ("the Act requires NPDES permits for discharges togroundwater where there is a direct hydrological connection between groundwaters and surfacewaters."); 55 Fed. Reg. 47990, 47997 (Nov. 16, 1990) (announcing stormwater runoff rules andexplaining that discharges to groundwater are covered by the rule where there is a hydrologicalconnection between the groundwater and a nearby surface water body).

In a 1998 site report, EPA stated that "[a] documented ground water hydrologicalconnection between a source and surface water discharge may be viewed as a conduit; or adiscernible, confined, and discrete conveyance," i.e., a point source. U.S. EPA, Report onHydrological Connection Associated with Molycorp Mining Activity, Questa, New Mexico, at 3

(Feb. 13, 1998). As a result, EPA has identified and regulated as point sources impoundmentsleaching into groundwater that discharge directly to a neighboring river, exactly as with thesituation at Sutton.

In its response to a comment questioning EPA's jurisdiction to regulate such discharges,EpA stated, "ftjhat a point source may transmit the pollutants to those surface waters throughdirectly connected groundwater does not deprive EPA ofjurisdiction over that addition.... toprotectjurisdictional surface waters porn discharges through groundwater, not to protectgroundwater qualityper se." U.S. EPA, Response to Comments on the Proposed NationalPollutant Discharge Elimination System (NPDES) General Permit for Discharges fromConcentrated Animal Feeding Operations (CAFOs) in New Mexico (NMG010000) (emphasisadded).

In its fact sheet for another NPDES permit, EPA explained, "[i]n most surface watersflow is sustained throughout much of the year by groundwater inflow. As a result, pollutantswhich may leak from containment structures... to the groundwater will typically move toward

12

(2001);"accord US v. W.R. Grace & Co., 429 F.3d 1224, 1237 (9th Cir. 2005).

In addition to EPA, "[t]he majority of courts have held that groundwaters that arehydrologically connected to surface waters are regulated waters of the United States, and thatunpermitted discharges into such groundwaters are prohibited under section 1311." Friends ofSanta Fe Cnty. v. LAC Minerals, Inc., 892 F. Supp. 1333, 1358 (D.N.M. 1995). N Cal. RiverWatch v. City ofHealdsburg, 496 F.3d 993 (9th Cir. 2007) (finding CWA coverage based onhydrologic connection), aff'g2004 U.S. Dist. LEXIS 1008 (N.D. Cal. Jan. 23, 2004), cert.denied, 552 U.S. 1180 (2008); Quivira Mining Co. v. US EPA, 765 F.2d 126, 130 (10th Cir.1985) (finding CWA coverage where discharges ultimately affected navigable-in-fact streamsvia underground flows); Us. Steel Corp. v. Train, 556 F.2d 822,852 (7th Cir. 1977) (CWA"authorizes EPA to regulate the disposal ofpollutants into deep wells, at least when theregulation is undertaken in conjunction with limitations on the permittee's discharges intosurface waters."); Greater Yellowstone Coal. v. Larson, 641 F. Supp. 2d 1120, 1138 (D. Idaho2009) ("there is little dispute that if the ground water is hydrologically connected to surfacewater, it can be subject to" the CWA); Nw. Envtl. Del Clr. v. Grabhorn, Inc., 2009 U.S. Dist.LEXIS 101359, *34 (D. Or. 2009) ("In light of the EPA's regulatory pronouncements, this courtconcludes that ... the CWA covers discharges to navigable surface waters via hydrologically .connected groundwater."); Hernandez v. Esso Std Oil Co. (P.R.), 599 F. Supp. 2d 175, 181(D.P.R. 2009) ("the CWA extends federal jurisdiction over groundwater that is hydrologicallyconnected to surface waters that are themselves waters of the United States"); Coldani v. Hamm,2007 U.S. Dist. LEXIS 62644, *25 (E.D. Cal. Aug. 14,2007) (a claim that pollution ofgroundwater that is hydrologically connected to navigable surface waters falls within thepurview of the CWA); N Cal. Riverwatch v. Mercer Fraser Co., 2005 U.S. Dist. LEXIS 42997,*7 (N.D. Cal. Sept. 1,2005) (''the regulations of the CWA do encompass the discharge ofpollutants from wastewater basins to navigable waters via connecting groundwaters"); IdahoRural Council v. Bosma, 143 F. Supp. 2d 1169, 1180 (D. Idaho 2001) ("the CWA extendsfederal jurisdiction over groundwater that is hydrologically connected to surface waters that arethemselves waters of the United States"); Williams Pipe Line Co. v. Bayer Corp., 964 F. Supp.1300, 1319-20 (S.D. Iowa 1997) (where groundwater flows toward surface waters, there is"more than the mere possibility that pollutants discharged into groundwater will enter 'waters of

13


nearby surface waters where they will be discharged and [a] ffect water quality in the receivingwaters." U.S. EPA, NPDES Permit ¹ LA0068420 Statement of Basis. As a result, EPAreiterated its authority to regulate such groundwater discharges "[t]o protect surface waterquality from the deleterious effects of these discharges." Id. (emphasis added).

Moreover, because the CWA prohibits "any addition ofany pollutant to navigable watersfrom any point source," 33 U.S.C. $ 1362 (12) (emphasis added), EPA has exercised its CWAauthority to regulate the leaching of contaminants from impoundments to hydrologically-connected groundwater even where the receiving surface water did not exceed applicable surfacewater quality standards ("WQS") and insufficient information existed to document that directdischarges to those surface waters exceeded the applicable WQS. See U.S. EPA, Report onHydrological Connection Associated with Molycorp Mining Activity, supra, at 3.

EPA's interpretation of the scope of the CWA is entitled to deference. Chevron USA.Inc. v. Natural Res. Def. Council, 467 U.S. 837 (1984); US. v. Mead, 533 U.S. 218, 226-28(2001); accord US. v, W R. Grace ck Co., 429 F.3d 1224, 1237 (9th Cir. 2005).

In addition to EPA, "[t]he majority of courts have held that groundwaters that arehydrologically connected to surface waters are regulated waters of the United States, and thatunpermitted discharges into such groundwaters are prohibited under section 1311." Friends ofSanta Fe Cnry. v, LAC Minerals, Inc., 892 F. Supp. 1333, 1358 (D,NM 1995). N. Cal. RiverWatch v. City ofHealdsburg, 496 F.3d 993 (9th Cir. 2007) (finding CWA coverage based onhydrologic connection), aff'g 2004 U.S. Dist. LEXIS 1008 (N.D. Cal. Jan. 23, 2004), cert.denied, 552 U.S. 1180 (2008); Quivira Mining Co. v. US. EPA, 765 F.2d 126, 130 (10th Cir.1985) (finding CWA coverage where discharges ultimately affected navigable-in-fact streamsvia underground flows); US. Steel Corp. v. Train, 556 F.2d 822, 852 (7th Cir. 1977) (CWA"authorizes EPA to regulate the disposal ofpollutants into deep wells, at least when theregulation is undertaken in conjunction with limitations on the permittee's discharges intosurface waters."); Greater Yellowstone Coal. v. Larson, 641 F. Supp. 2d 1120, 1138 (D. Idaho2009) ("there is little dispute that if the ground water is hydrologically connected to surfacewater, it can be subject to" the CWA); Nw. Envil. Def. Crr. v. Grabhorn, Inc., 2009 U.S. Dist.LEXIS 101359, *34 (D. Or. 2009) ("In light of the EPA's regulatory pronouncements, this courtconcludes that... the CWA covers discharges to navigable surface waters via hydrologicallyconnected groundwater."); Hernandez v. Esso Std. Oi! Co. (P.R.), 599 F. Supp. 2d 175, 181

(D.P.R. 2009) ("the CWA extends federal jurisdiction over groundwater that is hydrologicallyconnected to surface waters that are themselves waters of the United States"); Coldani v. Hamm,2007 U.S. Dist. LEXIS 62644, *25 (E.D. Cal. Aug. 14, 2007) (a claim that pollution ofgroundwater that is hydrologically connected to navigable surface waters falls within thepurview of the CWA); N. Cal. Riverwarch v. Mercer Fraser Co., 2005 U.S. Dist. LEXIS 42997,*7 (N,D. Cal. Sept. 1, 2005) ("the regulations of the CWA do encompass the discharge ofpollutants from wastewater basins to navigable waters via connecting groundwaters"); IdahoRural Council v. Bosma, 143 F. Supp. 2d 1169, 1180 (D. Idaho 2001) ("the CWA extendsfederal jurisdiction over groundwater that is hydrologically connected to surface waters that arethemselves waters of the United States"); Williams Pipe Line Co. v. Bayer Corp., 964 F. Supp.1300, 1319-20 (S.D. Iowa 1997) (where groundwater flows toward surface waters, there is"more than the mere poss!bility that pollutants discharged into groundwater will enter 'waters "f

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the United States,'" and discharge ofpetroleum into this hydrologically-connected groundwaterviolates the CWA); Us. v. Banks, 873 F. Supp. 650 (S.D. Fla. 1995) (finding CWA coveragebased on hydrologic connection via groundwater); Wash. Wilderness Coal. v. Hecla Mining Co.,870 F. Supp. 983, 990 (E.n. Wash. 1994) ("since the goal of the CWA is to protect the quality ofsurface waters, any pollutant which enters such waters, whether directly or through groundwater,is subject to regulation" under the CWA); Sierra Club v. Colo. Ref Co., 838 F. Supp. 1428, 1434(D. Colo. 1993) ("discharge of any pollutant into 'navigable waters' includes such dischargewhich reaches 'navigable waters' through groundwater"); McClellan Ecological SeepageSituation v. Weinberger, 707 F. Supp. 1182, 1195-96 (E.D. Cal. 1988) (groundwater that is"naturally connected to surface waters that constitute 'navigable waters'" is covered by CWA»,vacated on other grounds, 47 F.3d 325 (9th Cir. 1995).

The reasoning behind these decisions is straightforward:

Congress has explicitly stated that the objective of the CWA "is to restore andmaintain the chemical, physical, and biological integrity of the Nation's waters."Therefore, it would hardly make sensefor the CWA to encompass a polluter whodischarges pollutants via a pipe running from the factory directly to theriverbank, but not a polluter who dumps the same pollutants into a man-madesettling basin some distance short ofthe river and then allows the pollutants toseep into the river via the groundwater.

N Cal. Riverwatch, 2005 U.S. Dist. LEXIS 42997 at *7-8 (internal citation omitted) (emphasisadded). That is precisely the situation at Sutton, and accordingly the CWA applies to Progress'sunpermitted discharges from the coal ash lagoons that discharge contaminated groundwater intoSutton Lake.

Because these hydrologically connected discharges from the unlined lagoons tonavigable waters of the United States are continuous and ongoing, they will continue afterthe date of this letter and the subsequent filing of a lawsuit.

Persons Responsible for Violations

Sutton is owned and operated by Progress, a North Carolina corporation. Progress isresponsible for all violations at Sutton.

Person Giving Notice

Since 1993, Cape Fear River Watch has been working to protect and improve the waterquality of the Lower Cape Fear River Basin through education, advocacy, and action. Cape FearRiver Watch engages residents of the watershed through programs to preserve and safeguardtheir river.

The Waterkeeper Alliance, Inc. is a non-profit corporation founded in 1999 which servesas the umbrella organization for approximately 200 local Waterkeeper organizations (includingRiverkeepers, Baykeepers, Coastkeepers, etc.). The mission of the Waterkeeper Alliance is to

14


the United States,'" and discharge ofpetroleum into this hydrologically-connected groundwaterviolates the CWA); US. v. Banks, 873 F. Supp. 650 (S.D. Fla. 1995) (finding CWA coveragebased on hydrologic connection via groundwater); Wash. Wilderness Coal. v. Hecla Mining Co.,870 F. Supp. 983, 990 (E.D. Wash. 1994) ("since the goal of the CWA is to protect the quality ofsurface waters, any pollutant which enters such waters, whether directly or through groundwater,is subject to regulation" under the CWA); Sierra Club v. Colo. Ref. Co., 838 F. Supp. 1428, 1434(D. Colo. 1993) ("discharge of any pollutant into 'navigable waters'ncludes such dischargewhich reaches 'navigable waters'hrough groundwater"); McClellan Ecologica! SeepageSituation v. Weinberger, 707 F. Supp. 1182, 1195-96 (E.D. Cal. 1988) (groundwater that is"naturally connected to surface waters that constitute 'navigable waters'" is covered by CWA)),vacated on other grounds, 47 F.3d 325 (9th Cir. 1995).

The reasoning behind these decisions is straightforward:

Congress has explicitly stated that the objective of the CWA "is to restore andmaintain the chemical, physical, and biological integrity of the Nation's waters."Therefore, it would hardiy make sensefor the CWA to encompass a polluter whodischargespollutants via a pipe runningPom thefactory directly to theriverbank, but not a polluter who dumps the same pollutants into a man-madesettling basin some distance short of the river and then allows the pollutants toseep into the river via the groundwater.

N. Cal, Riverwatch, 2005 U.S. Dist. LEXIS 42997 at ~7-8 (internal citation omitted) (emphasisadded). That is precisely the situation at Sutton, and accordingly the CWA applies to Progress'sunpermitted discharges from the coal ash lagoons that discharge contaminated groundwater intoSutton Lake.

Because these hydrologically connected discharges from the unlined lagoons tonavigable waters of the United States are continuous and ongoing, they will continue afterthe date of this letter and the subsequent filing of a lawsuit.

Persons Res onsible for Violations

Sutton is owned and operated by Progress, a North Carolina corporation. Progress isresponsible for all violations at Sutton..

Person Givin Notice

Since 1993, Cape Fear River Watch has been working to protect and improve the waterquality of the Lower Cape Fear River Basin through education, advocacy, and action. Cape FearRiver Watch engages residents of the watershed through programs to preserve and safeguardtheir river.

The Waterkeeper Alliance, Inc. is a non-profit corporation founded in 1999 which servesas the umbrella organization for approximately 200 local Waterkeeper organizations (includingRiverkeepers, Baykeepers, Coastkeepers, etc.). The mission of the Waterkeeper Alliance is to

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connect and support local Waterkeeper programs to provide a voice for waterways andcommunities worldwide. The Waterkeeper Alliance supports and empowers memberWaterkeeper organizations to protect communities, ecosystems, and water quality; promotes theWaterkeeper model for watershed protection worldwide; and advocates for issues common toWaterkeeper programs. The Cape Fear Riverkeeper is a member of the Waterkeeper Alliance,

The Sierra Club is a national conservation organization with over 600,000 membersnationwide, including 14,500 members in North Carolina. The Sierra Club has a long history ofworking to protect surface water quality both nationally and locally. Preserving the health of thenation's waters has been a primary goal of the Sierra Club since its founding in 1892. The SierraClub works in and has members in New Hanover County, North Carolina, and the Cape FearRiver watershed.

The names, addresses, and phone numbers of the persons giving notice are:

Kemp Burdette, Cape Fear RiverkeeperCape Fear River Watch617 Surry StreetWilmington, NC 28401910-762-5606

Donna Lisenby, Coal Campaign CoordinatorWaterkeeper Alliance, Inc.154 Silverstone Farms RoadVilas, NC 28692704-277-6055

Kelly Martin, North Carolina Campaign RepresentativeSierra Club34 Wall Street, Suite 709Asheville, NC 28801828-251-1272

The Conservation Groups believe that a negotiated settlement of these violations,codified through a court-approved consent decree, would be preferable to protracted litigation.However, if we are unable to reach an enforceable settlement agreement, the ConservationGroups are prepared to file suit in the United States District Court for the Eastern District ofNorth Carolina pursuant to $ 505(a) of the CWA, 33 U.S.C. $ 1365(a)(1), after sixty days Iromthe date of this letter. This lawsuit will seek injunctive relief, appropriate monetary penalties,fees and costs of litigation, and such other relief as the Court deems appropriate.

If you have any questions concerning this letter or the described violations, or ifyoubelieve this notice is incorrect in any respect, please contact the undersigned counsel, theSouthern Environmental Law Center, at (919) 967-1450 (tel.), (919) 929-9421 (fax). During thenotice period, we are available to discuss this matter with you, but suggest if you desire toinstitute negotiations in lieu of a civil action that you do so immediately as we do not intend todelay prosecution of this suit once the notice period has expired. Please be advised that thefailure to remedy any of the violations set forth in this letter can result in a court order enjoining

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r0ili. Hollern III'-L..-I'D_...(l../'-~:-'--T"'[email protected]

Chandra [email protected]

r---f'J1~ l~Nicholas S. Torrey I'[email protected]

Enclosures

cc: Via certified mail - return receipt requested:

A. Stanley Meiburg, Acting Regional Administrator, U.S. EPA, Region 4

Via e-mail:

Mark Nuhfer, U.S. EPA, Region 4Karrie-Jo Shell, U.S. EPA, Region 4Gina Fonzi, U.S. EPA, Region 4Matthew Hicks, U.S. EPA, Region 4

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Notice of Intent — L.V. Sutton Steam Elecnic Plant ti NC0001422June 19, 2013

further violations and imposing civil penalties of $37,500 per violation, per day for eachviolation of the CWA.

Thank you for your prompt attention to this matter.

Since

[email protected]

Chandra [email protected]

IG~ [email protected]

Enclosures

cc: Via certified mail — return receipt requested:

A. Stanley Meiburg, Acting Regional Administrator, U.S. EPA, Region 4

Via e-mail:

Mark Nuhfer, U.S. EPA, Region 4Karrie-Jo Shell, U.S. EPA, Region 4Gina Fonzi, U.S. EPA, Region 4Matthew Hicks, U.S. EPA, Region 4

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